Marchex describes itself as “a leader in delivering vertical and local online traffic to merchants.” Awww, cute and cuddly as a teddy bear, right? Not so fast…note the careful wording of ‘local online traffic to merchants’–marketing department, give yourself a pat on the back.

Readers, take note of the placement of the word ‘local': their tagline does NOT read ‘delivering online traffic to LOCAL merchants.’ Make no mistake, Marchex is after the big money. To their credit, at least they’re explicit about listing Fortune 500 companies as their primary advertiser target.

What Marchex’s recent launch does is morph that teddy into a grizzly, gobbling up natural search listings (not to mention high quality domain names like ‘bayareahotels.com’ and ‘sanfranciscoveterinarians.com’) from REAL local merchants.

Take, for example, two of its most recent websites: www.94102.com and www.94123.com. These are two unique websites both targeted towards the San Francisco market. As Sterling notes, Marchex is no slouch in the SEO department, and you can bet there is plenty of VC money behind its efforts. It would not surprise me if both (and even a few more across the bay like 94608.com and 94618.com) gobble up two of the ten seven first-page listings for geo-targeted phrases in San Francisco. REAL local merchants, even if they choose to advertise on these sites, are now going to be one click further away from the SERPs. They’re going to be less likely to stand out against a sea of banner ads and rather opaquely-generated user reviews.

To my mind, Marchex has just become one more behemoth company trying to appear ‘local,’ when what they’re REALLY doing is causing more local advertisers to spend more money on more ads across more of their properties.

Soon, I fear, without a drastic change to Google’s/Yahoo’s/MSN’s/Ask’s algorithms, local businesses are going to be priced out of online advertising on all of these ‘local’ sites which are coming to dominate the SERPs (Yelp, Citysearch, Insiderpages, Boulevards, Marchex, and others). Craigslist remains one of the few free outlets with good visibility.

Fortune 500 clients with deep pockets and a deep understanding of online advertising will be the only businesses able to afford paid placement across these networks, and we’ll end up right where we started a few years ago: without a true ‘local’ vertical anymore.

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